The ACD Method

You're most welcome. I managed to finish my chores and errands before the weekend so I'm relaxed and in a chatty mood.

Keep up with the number lines and always relate them to the daily charts. I went through a phase where I lost faith in the number lines. Then a couple of trades Mav signalled well before the fact inspired me and I went back and took another look. Number lines are at their best when it appears nothing is happening.

Yes, it is cumbersome in the beginning. Track just for the instruments you trade most. As you find them increasingly useful, expand your range. I started with just 12.

 

do you always use about a 35 delta 60 days out or look at different strikes and price levels and then back into delta (soft delta is 35 ?) soft to me would be a .15 or lower .... Thanks

 

Soft deltas would be anything OTM with only time value. I'm not fixated on 35 delta, I look at IVs but don't want to go so far out that I don't benefit enough from the move. I can't predict the extent of the move so I don't want to be too far out. I do sometimes mix what I buy if I expect a big move, like some 35s and some 10s.

You get serious bang for the buck with the 10s if there is a huge move.

 

Thanks for chipping in and keeping the ship on course.

All good responses. And good points on leverage. Leverage is the thing that seems to kill 90% of the people on ET. A lot of people seem to mistake leverage for skill. Or leverage for performance. I assume you are referring to mbftrader at BMT. I gotta admit, winning 100% of the time is pretty impressive.

 

Looked up his handle, it's mfbreakout. He hasn't posted here since January 2013, so at least the ET folks have been spared the con.

 

Yeah I know the guy. He kept a journal here on ET and use to post on this thread a lot.

 

In Master Mav's ebook there are a number of posts dealing with leverage (sometimes with a related subject like volatility). Here's a few gems:

2-22-11 05:51 PM

I'm dead serious. Look, what kills most guys is leverage. The reason why retail guys actually have a "slightly" higher success rate is that most of them are not using the same leverage as prop guys. Leverage speeds up the game very fast. Very few people can trade at that speed over the long term.

Another problem for most of them is over trading. Over trading with leverage is not a good formula. Most of them also lacked discipline. Most of them were just in this game for the quick money, not because they had a real passion for trading. You would be amazed at how many people came into my office and the first thing they told me is that they were passionate about trading and passion was one thing they actually didn't have. At the end of the day, most people lie to themselves as much as they lie to others.

Another factor was directional trading. The market neutral guys tend to survive in this game. Even Fisher himself started saying this recently that they were spreading everything. Just punting on direction each and every day over and over is a tough gig. Directional trading is pretty simple and straightforward if one is not using leverage. But directional trading with leverage is a whole other beast.

09-05-11 12:02 AM

Volatility usually means the trade is becoming crowded, over leveraged and the price action is driven by stops. It's very hard to make money in those markets. Usually "daytraders" want volatility because they have a fixed amount of time to exit a position. A swing trader does not. A swing trader wants trend, not volatility. Of course all traders want movement, but not erratic movement.

It's very hard to enter a swing trade with a stop if there are stops all around you and people jumping in and out with massive leverage. I much rather have a quiet market that is being slowly accumulated that is trending.

One of the mistakes a lot of newbie’s make is looking for volatility. It causes them to get into stocks or commodities "after" they have made big moves and now the product is whipping back and forth stopping everyone out. It causes them to over trade and also to build bad habits i.e. taking profits too quickly.

Once you see an explosive move in volatility, usually it's best to look for trades elsewhere. Not wait for them to calm down and get in them. The volatility usually represents the culmination of a move.

I remember back when I daytraded in NY for Worldco as a newbie, I would run scans everyday for volatile stocks, because that is where I thought the "action" was. Then one day a guy came up to me and said “Why are you watching those stocks, the move already happened. Watch these”. I said, “Those stocks look dead, why would I trade them?” And his response was, “Because they are going to move.” I asked him, “How did he know that?” He said, “It takes practice, but that is the skill you need to develop. It's not easy, but who said trading was.”

 

A few Sunday night number lines.

 

To the good gentleman who asked if I knew where a SS format might be on tracking number lines? I'm not aware of one previously posted on this thread.

For me, I keep a couple SS's with multiple tabs that all come together in a summary tab. I've attached a portion of my XLB tab so you can see the layout I use. It's simple but works for me.

 

Thanks

so each individual commodity or stock you have to load into a chart and visually look at OR and determine if made A' up or down or none at all imagine 20 stocks and maybe 5 commodities ? Not an issue, just want to learn if anyone automated this process and what platform ? Thanks